UNCTAD DISCLOSES HOW NIGERIA, OTHERS CAN ENHANCE FOREX EARNINGS FROM GUM ARABIC EXPORT

By improving workers’ skills, increasing product differentiation and value addition, enhancing marketing and finance solutions and fostering political stability, Nigeria and other key producers of gum Arabic can improve their earnings from export and processing of the commodity. 

According to a new report by the United Nations Conference on Trade and Development (UNCTAD), it is imperative for the producing countries to explore processing opportunities as many African countries that export crude gum arabic at low prices re-import processed gum at substantially higher prices to meet local manufacturing demand.

Gum arabic is natural product derived from hardened acacia tree sap, harvested in the Sahel region of Africa, gum arabic is used primarily by the food industry. Given its many desirable properties, safety record and natural origin, gum arabic is the most commercially valuable of what are known as exudate gums – those secreted by plants.

It is used as a stabilizer, a binder, an emulsifier or a viscosity-increasing agent, not only in confectionery, soft drinks, wine, liquor, and dietary fibre, but also for non-food products such as pharmaceuticals, cosmetics, printing, ceramics, photosensitive chemicals, textiles, paper, ink, paints and adhesives.

Indeed, the three largest exporters of crude gum arabic are Sudan, which accounts for 66% of the total, Chad with 13%, and Nigeria with 8.5%, in 2014–2016. In addition, exports of processed gum arabic more than tripled, from 17,000 tonnes to 53,000 tonnes in the same period.

Although the annual average export value of processed gum arabic increased by 158% in the last 25 years, the annual average export value of crude gum arabic increased by only 58%. Important differences exist between producing countries. Sudan has historically played a leadership role in the gum arabic industry.

The report showed that Nigeria has been hindered by quality inconsistency, poor market organization and production disruptions due to the Boko Haram insurgency.

In Cameroon, Mali and Senegal, exports have started to rebound after decades of decline and stagnation. In many other countries in the African gum belt, domestic gum resources remain underexploited, as in parts of Ethiopia, Kenya and South Sudan.

“Paradoxically, many African countries that export crude gum arabic at low prices re-import processed gum at substantially higher prices to meet local manufacturing demand,” Mario Jales, an economist at UNCTAD’s commodities branch, said.

In a highly concentrated sector, UNCTAD proposes reforms from the micro to the national institution levels, as Jales added that, “The objectives are to ensure that all stakeholders get a fair share of the total value generated along the gum-arabic global value chain.”

The report shows that gum arabic is a promising commodity for producing countries due to its potential to generate foreign exchange, promote sustainable agriculture and forestry, ensure food security and combat desertification and climate change.

Two countries, France and India, import three-quarters of all crude gum arabic. After processing, France alone exports two-thirds of all processed gum arabic. Notably, a single European manufacturer, France-based Nexira – which calls itself a manufacturer of natural innovative ingredients for the food, nutrition and health industries – is said to hold a 50% global market share in processed gum arabic products.